Investing through life's stages

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By Katharina Helmick

MetroWest Daily News, Framingham, MA

By Katharina Helmick

Posted Aug. 10, 2014 at 12:01 AM

By Katharina Helmick

Posted Aug. 10, 2014 at 12:01 AM

» Social News

Most investors will experience some common life events—getting married, buying a first home, starting a family, becoming an empty-nester and retiring—that will require them to reassess their investment situation and make adjustments as needed.

Getting started

The first part of a lifelong investment strategy is establishing disciplined savings habits. Regular contributions to savings or investment accounts are often the most productive; and if you can automate them, even better.

Universal factors that affect investment decisions

Once you begin saving on a regular basis, you will soon have to decide how to invest the money you are saving. Regardless of what financial stage of life you are in, you will have to determine what your needs are and how comfortable you are with risk.

Investment objectives. What do you need the money for? The answer to this question will help determine whether you want to put your savings into investment products that produce income for you or that concentrate on growing the value of your investment.

Time and risk tolerance. All investing involves a certain amount of risk. How well you tolerate price fluctuations in your investments will need to be balanced against your required rate of return in determining the amount of risk your investments should carry. An offsetting factor to risk is time. If you plan to hold an investment for a long time, you will probably tolerate more risk because you have the time to make up any losses you may experience early on. For a shorter-term investment, such as saving to buy a house, you may want to take on less risk and have more liquidity in your investments.

Investing—a lifelong journey

The following are some major life events and some investment decisions that you may want to consider:

When you get your first "real" job:

n Start a savings account to build a cash reserve.

n Start a retirement fund and make regular monthly contributions, no matter how small.

n Carefully study the options you may have for taking money from your company retirement plan. Discuss your alternatives with your financial advise.

n Review your combined potential income after retirement. Reallocate your investments to provide the income you need while still providing for some growth in capital to help beat inflation and fund your later years.

Discipline and a financial adviser can help

One of the hardest things about investing is disciplining yourself to save an appropriate portion of your income regularly so that you work to wards your investment goals. And if you're not fascinated with investing, it may be hard to force yourself to review your financial situation and investment strategy on a regular basis. Establishing a relationship with a trusted financial adviser can go a long way toward helping you practice smart money management over your entire lifetime.

Katharina Helmick of Weston is a financial adviser with LPL Financial. She can be reached at katharina.helmick@lpl.com.